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Jamie Dimon, Chairman and CEO, JPMorgan Chase & Co. , at the US Capitol for a luncheon meeting with the New Democratic Alliance in Washington, D.C., United States, on Tuesday, June 6, 2023.
Nathan Howard | bloomberg | Getty Images
c. B. Morgan Chase It reported second-quarter earnings on Friday that beat analysts’ expectations as the company benefited from higher interest rates and rising interest income.
This is what the company reported:
- Earnings: $4.37 per share adjusted versus the $4 per share Refinitiv estimate
- Revenue: $42.4 billion vs. $38.96 billion estimated
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Net income rose 67% to $14.5 billion, or $4.75 per share. When excluding the impact of the First Republic acquisition in early May — a $2.7 billion “bargain buy gain” from the government-brokered acquisition, plus loan reserve creations and securities losses associated with the purchase — earnings were $4.37 per share.
Revenue rose 34% to $42.4 billion as JPMorgan benefited from higher rates and strong loan growth. The revenue gain was supported by a 44% jump in net interest income to $21.9 billion, which topped StreetAccount estimates by nearly $700 million. Average loans jumped 13%, while deposits fell 6%.
Shares of the bank jumped more than 2% in pre-market trading.
JPMorgan has been a standout lately on several fronts. Whether it’s deposits, financing costs or net interest income – all hot topics since the regional banking crisis began in March – the bank has outperformed its smaller peers.
This has helped send the bank’s shares up 11% so far this year, compared to KBW Bank’s 16% drop. When JPMorgan reported its results last April, its stock posted its biggest dividend increase in two decades.
This time around, JPMorgan will benefit from owning First Republic after its US-brokered acquisition in early May.
The acquisition that added approx $203 billion In loans, securities, and $92 billion in deposits, JPMorgan may help protect JPMorgan Bank from some of the headwinds the industry faces. Banks are losing out on low-cost deposits as customers find higher-yielding places to deposit their money, causing the industry’s financing costs to rise.
This is squeezing industry profit margins. In the past month, several regional banks have disclosed lower-than-expected interest yields, and analysts expect more banks to do the same in the coming weeks. Moreover, banks are expected to disclose slower loan growth and higher costs related to commercial real estate debt, all of which weigh on banks’ bottom line.
Lenders have begun to set aside more provisions for loan losses in anticipation of a slowdown in the economy this year. JPMorgan is expected to record provisions of $2.72 billion for credit losses, according to a StreetAccount estimate.
The bank will not be able to avoid the downturns it is facing in other areas, namely the slowdown in commercial and investment banking activity. In May, JPMorgan said that revenue from its Wall Street activities is on track for a 15% decline from a year earlier.
Finally, analysts will want to hear what JPMorgan CEO Jamie Dimon has to say about the health of the economy and his outlook on banking regulation and consolidation.
Wells Fargo Also reported Friday earnings, and Citigroup The results are on deck. American bank And Morgan Stanley Tuesday report. Goldman Sachs Reveals results Wednesday.
This story is evolving. . Please check back for updates
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